NEW DELHI (Reuters) - India approved a policy on Wednesday allowing extra time to contractors of old blocks to unlock oil and gas reserves of more than 426 million barrels, worth over $21 billion, as it seeks to cut its dependence on imports.

Oil tankers are seen parked at a yard outside a fuel depot on the outskirts of Kolkata February 3, 2015. REUTERS/Rupak De Chowdhuri/File Photo

The policy approved by the Cabinet will help companies including Cairn India and Oil and Natural Gas Corp that are exploring blocks awarded before 1999.

Prime Minister Narendra Modi’s Bharatiya Janata Party has been taking steps to boost local oil and gas output, which had been almost stagnant for decades. India imports about 80 percent of its oil needs.

Modi set a target in 2015 to cut dependence on oil imports from about four fifths to 67 percent by 2020. Brent crude was trading at $50.2 a barrel at 1627 GMT. [O/R]

During the extension period, contractors are expected to make an additional investment of more than $5.4 billion, a government statement said.

“This policy will enable the contractors to extract not only the remaining reserves but also plan to extract additional reserves by implementing new technologies,” a government statement said.

During April-February, the production from these old oil and gas blocks was around 55 million barrels of oil and 965 million cubic metres of natural gas, the statement said.

The Cairn-operated Barmer block in the desert state of Rajasthan accounts for about half India’s onshore production of crude oil.

During the extension period, the government’s share in the profit earned from these blocks will rise by 10 percent, the statement added.

Reporting by Neha Dasgupta and Nidhi Verma; Editing by Ruth Pitchford and David Evans